In a fairly sudden change of approach, several major banks are now predicting that the Bank of England will cut interest rates this week down to 3.75 per cent.
The MPC’s next meeting comes on Thursday 6 November and, up until only a few weeks ago, few if any thought there would be a cut pre-Budget - most didn’t expect one until 2026. But the combination of fewer jobs vacancies as companies cut back on hiring, and inflation unexpectedly flattening out in September, now has the like of Barclays and Goldman Sachs believing that a split vote will result in a November cut in a boost to mortgage seekers.
Meanwhile, the price of oil has pushed higher as Opec pauses its output hikes, while gold has crept back above $4,000 after a steep recent decline.
Follow The Independent’s live coverage of the latest stock markets and business news here:
Key points
- Inflation peaking lower than 4% leads to prediction of interest rate cuts
- Barclays say food (dis)inflation critical factor in MPC voting for cut to 3.75%
- Economics expert details why Bank of England may wait until after Budget
- How to check if you've won on Premium Bonds this month
- Brits spending 8% more on essential costs this year
Rachel Reeves, the Lifetime ISA is broken - please fix it
14:40 , Karl MatchettThe Lifetime ISA was meant to help young people buy their first home. Instead, it’s punishing them for trying. Gabriel Nussbaum explains why the Chancellor needs to reform it - before more first-time buyers pay the price.
Homeowners encouraged to seal mortgage deals now
14:20 , Karl MatchettIf you’re one of 400,000 or so set to renew a mortgage before the end of the year, the advice remains to not hang around - despite potential Bank of England cuts.
“Fixed rate mortgages do not always bend to the will of base rate cuts, and instead are more intrinsically linked with swap rates. Borrowers keen to refinance would be wise to seek advice to secure a new deal and not wait around for more rate cuts by the Bank of England,” explained Rachel Springall, Finance Expert at Moneyfactscompare.
Omer Mehmet, of Trinity Finance, suggests part of this is down to the property market not firing on all cylinders and lenders with targets to meet.
“With the Budget looming, now may be a good time for borrowers to lock into any rates now in case the Budget sends them spiralling upwards again,” he said.
One in five UK adults would run out of money in 4 weeks if they lost their job
14:00 , Karl MatchettA worrying new survey from ABC Finance has come back, suggesting British families do not have huge financial resilience.
Typically, experts recommend having 3-6 months’ of costs set aside in an emergency savings fund.
But this research says two in five can’t get close to that and would be in trouble within eight weeks if they lost their job.
The survey of 2000 people found:
- More than two in five working adults (41.4%) in the UK would run out of money within two months if they lost their regular income
- One in five (19.7%) cannot last one month without income
- And 5.7% could manage just 1-2 weeks without hitting struggles
Nutmeg 'retired' as JP Morgan put branding in-house
13:40 , Karl MatchettIf you’re an investor (or even just a commuter on trains and tubes to be fair) you may know the Nutmeg brand - a product which helped people get started on the investment ladder.
That brand is now being retired, with JP Morgan bringing their investment products under their own label - it will be called Personal Investing.
So if that’s who you use, don’t be alarmed to see the changes!
Average mortgage rates drops below 5%
13:20 , Karl MatchettFollowing on from last week’s spate of lenders dropping rates on their mortgage products, the average deal is now under 5%.
Mary-Lou Press, president of Propertymark, said:
“It’s extremely positive to see a far more competitive lending market than only twelve months back. Consumers have faced a doubled-sided challenge in recent years with elevated inflation and heightened base rates.
“Although we have seen three base rate cuts throughout the year to date, affordability has remained challenging for many. It will be a case of all eyes on the Bank of England on Thursday, as the next base rate decision is made.
“Also, with strong rumours of a potential overhaul for those in England and Northern Ireland regarding Stamp Duty, there will be close watch on the chancellor, as fiscal plans for the forthcoming year are shared within the Autumn Budget in only a few weeks time too.”
POLL: What would encourage you to invest in stocks and shares?
13:00 , Karl MatchettEach week, we invite readers to share their views on the financial stories making headlines – and impacting your bank balance.
This week we’re asking: which one factor is most likely to get you encouraged to invest in stocks, shares and funds?
Vote here and leave your comments!
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Poll: What would encourage you to invest in stocks and shares?
Five brilliant ways to use your end-of-year bonus
12:40 , Karl MatchettIf you are in full-time work, you might be among the fortunate employees who don’t just get a salary, but an extra bump in the pay packet around this time of year.
Bonus season is approaching, so if you want to get the maximum financial impact from yours, it’s time to start thinking about how you’ll use it or spend it.
Naturally there are additional temptations for extravagance at this time of year too - but thinking of it as a future reward rather than free spending money might transform a bonus’ impact.
From Christmas spending to investing: 5 brilliant ways to use your end-of-year bonus
Think tank says economic growth to be pushed higher this year
12:20 , Karl MatchettUK economic growth will be stimulated this year by over £1tn of government spending, meaning a 1.5 per cent GDP increase - more than expected, says EY Item Club.
However, they also suggest growth will decelerate next year, in part due to potential tax increases from the upcoming Budget.
EY are not forecasting an interest rates cut for the rest of the year.
Social media earnings push young adults into tax earnings they don't know about
12:00 , Karl MatchettHere’s a bit of data showing the impact social media can have - and also how young adults might not know it makes them liable for tax.
HMRC allow each person a £1,000 trading allowance - basically income you can have from places without needing to declare it and pay tax.
But some people a) don’t know what that covers and b) that they need to declare it past the threshold.
As an example, people selling second-hand items on platforms like Vinted might bring in quite a bit of cash on the side - but just £84 a month from there across the year will take you past that £1,000 threshold.
Now, business bank firm Tide’s research shows over half (55%) of 18 to 24-year-olds are earning money or being gifted items from platforms like TikTok and Instagram - but only a third (36%) have filed a tax return to declare that income.
The average social media earner now makes £1,223 a year, it says - meaning some might get hit with fines over unpaid taxes.
UK households plan to 'improve financial situation'
11:40 , Karl MatchettAn additional note on that extra £200 that the average Brit has in their disposable income.
The report says most people plan to use it to improve their long-term financial resilience rather than on extra spending or lifestyle changes.
“Consumers reported year on year increases in spending on loan repayments (+4%), credit card repayments (+14%) and private and workplace pensions (+17%) since 2024,” the report added.
“Our latest MoneySuperMarket Household Money Index shows that energy spending fell over the past year, however bills may climb again this winter following the October price cap change. That’s why it’s worth reviewing your tariff and considering a fixed-rate deal if it suits your needs,” said Lis Barton, Chief Customer Officer of Mony Group.
HMI report shows Brits spending 8% more on essential costs this year
11:20 , Karl MatchettMoneySuperMarket have run their Household Money Index report and it shows an uptick of 8 per cent spending by UK households compared to last year on essential bills and everyday expenses.
Brits are spending £55.26 a day on those, MSM say, with Londoners now spending above £2,000 a month on those essential costs for the first time since they started the report two years ago.
It wasn’t all bad news in the report, however.
The average person’s disposable income rose from £684.70 to £900.91 (32 per cent up) meaning people have more than £200 extra to spend or save a month, the report claims.
That’s in part due to rising salaries outpacing inflation over a period earlier this year.
Premium Bonds: How to check if you've won
11:00 , Karl MatchettNS&I say the two £1m winners in this month’s draw are from York and Shropshire.
Over £401m in total was handed out in prizes, in what marked the 69th anniversary since the Premium Bonds prizes first began.
From tomorrow you can check whether you’ve won a prize via the usual methods:
To check prizes on the NS&I website Bond holders will need their Premium Bonds holder’s number. For those using the Premium Bonds app they can use their holder’s number, or their NS&I number.
If you already know yours then here’s the two winning numbers:
- 258GE105589
- 568FY679677
Both winners held the max of £50,000 in PBs.
Experian to factor in rent payments for credit score
10:40 , Karl MatchettCredit score firm Experian are to factor in rental payments for the first time.
It means renters will see their payments history reflected in their score - while the bands are also set for an expansion and overhaul, report PA.
Scores will now go up to 1,250 instead of 999, with the five bands given new names and colours.
Experian say there won’t be any change to someone’s ability to get credit just on account of these alterations.
Ryanair’s profits soar after airfare hikes
10:20 , Karl MatchettRyanair has revealed soaring earnings after hiking airfares and earlier aircraft deliveries helping it fly more passengers.
The low-cost airline reported a pre-tax profit of 2.9 billion euro (£2.6 billion) for the first half of the financial year, 40% higher than the same period last year.
It flew 119 million passengers, 3% more than last year, after improved Boeing aircraft deliveries meant it could carry extra passengers.
Ryanair has been impacted by slower production following strikes among Boeing workers in late 2024.
Ryanair’s profits soar after airfare hikes and early Boeing deliveries
FTSE 100 rises - oil firms benefit from price rise
10:00 , Karl MatchettA quick check in on the stock markets this morning with the FTSE 100 up 0.15 per cent.
Midweek last week saw the index hit another new record high.
Here’s some morning analysis from one of our regular industry experts:
“The FTSE 100 got off to a solid start with oil helping to grease the wheels of the index,” said AJ Bell investment director Russ Mould.
“The decision by producers’ cartel OPEC+ to pause further output hikes at the start of next year, amid concerns about a glut of supply, helped give oil prices a lift and, in turn, boosted UK market heavyweights BP and Shell.
“Prudential was among the top FTSE 100 risers as it continued to ride the wave of goodwill engendered by a strong set of third-quarter numbers last week. Precious metals miner Fresnillo shares ticked higher as gold prices stabilised after their recent sell-off.
“Elsewhere in the mining sector, there was pressure on share prices on signs of slowing Chinese economic growth and weaker factory activity across Asia as US tariffs take their toll. Vodafone was the top faller on the FTSE 100 after investment bank UBS downgraded its recommendation on the stock to ‘sell’, citing several competitive risks.”
‘More than a hundred tax and spending plans’ being considered by Reeves
09:40 , Karl MatchettThe chancellor is reportedly considering more than one hundred different tax and spending measures at the upcoming Budget, amid concerns the fiscal watchdog could be about to downgrade the UK’s productivity performance.
Rachel Reeves is thought to be looking at hitting the top third of earners as part of an attempt to fill a black hole in the public finances of up to £50bn.
Reeves considering ‘more than a hundred tax and spending plans’ ahead of Budget
Interest rates: five steady cuts after sharp correction up
09:20 , Karl MatchettIt’s sometimes hard to keep pace with everything around interest rates, how much it has all changed and the wider impact it has.
This chart helps display the rate of change, at least: post-Covid we had basically a zero rate for a long period, but the cost of living crisis across 2022 and 2023 saw interest rates shoot higher in quick succession as the BoE tried to stem inflation, which hit 11%.
Since last year the base rate began to decline, we’ve had five cuts in total.
Three this year came in February, May and August.
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Economics expert explains why BoE may wait for Budget
09:00 , Karl MatchettThomas Pugh, chief economist at tax firm RSM UK, is one of those who thinks the MPC will remain prudent for now.
“Financial markets have gone from pricing in less than a 25% chance of another rate cut by the end of the year to a two-thirds chance now, due to a lower inflation peak and rumours of a less-inflationary budget,” he explained.
“We doubt this will be enough to tempt the Monetary Policy Committee (MPC) into a rate cut next week. We expect a 3-6 vote for a hold. But it throws the door wide open to a rate cut in December, especially if the budget is deflationary.”
'Odds 50-50' on a December rate cut
08:40 , Karl MatchettNot everyone is immediately convinced, of course.
Plenty still think it’s more likely that the BoE will persist with their cautious approach so far and at least wait for one more monthly set of data to be taken in before opting to cut.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, points to the money market still being split on December at the moment.
“London stocks have a touch higher this morning as investors brace for a pivotal week at the Bank of England. Rates are widely expected to stay at 4% on Thursday, but the real debate is whether policymakers deliver a cut in December, with odds hovering near 50-50. With stubborn inflation and slowing growth, expectations for the year ahead are in the balance.
Barclays join calls for interest rates cut
08:20 , Karl MatchettLast week Goldman Sachs said they think a rate cut is in the offing, and now Barclays have joined them.
Noting that “shop price data point to further disinflation in October”, Barclays analysts have suggested the Bank of England’s MPC members will provide a split vote - they predict 5-4 - but the ultimate outcome will be a cut.
“We acknowledge the decision remains finely balanced, but expect the recent downside inflation and labour market news to tip the vote to a cut,” read the analysis note, from Jack Meaning and Silvia Ardagna.
Food inflation is a key tipping point in the vote, they predict, and it appears to be on the way down (disinflation).
Inflation data behind change of heart on interest rate cuts
08:14 , Karl MatchettRewind the tape a few weeks and banks, economists and analysts were unified in their belief: no interest rate cut pre-Budget, quite possibly none for the rest of 2025.
However, inflation data for September changed all that.
We didn’t hit 4% as expected, and now the worst is expected to have passed.
On the back of that, jobs data came in weaker again too as companies continued to reign in the hiring and vacancies were down to a multi-year low.
Now, more than one bank has changed its tune.
Business and Money live: 3 November
07:55 , Karl MatchettMorning all and welcome to another week of your personal finance, UK business and stock markets news on The Independent.
We’ll start today with interest rates talk ahead of the MPC meeting, which comes on Thursday.
